(Circulated by Authority of the Minister for Agriculture, Fisheries
and Forestry,

the
Hon Peter McGauran MP)

2.

MURRAY-DARLING BASIN AMENDMENT BILL 2006

GENERAL OUTLINE

The main purpose of the Bill is to amend the
Murray-Darling Basin Act 1993 (the "Principal Act") to
approve and give effect to the Murray-Darling Basin Agreement
Amending Agreement 2006 between the Commonwealth, New South Wales,
Victoria, Queensland, South Australia and the Australian Capital
Territory ("Amending Agreement") to amend the Murray-Darling Basin
Agreement ("Agreement").

The effect of the Amending Agreement is to enable
improved business practices for the Murray-Darling Basin
Commission’s (Commission) water business River Murray
Water. The Amending Agreement also confirms that Queensland
cannot be held liable for works and measures in which it is not
directly involved. The Amending Agreement is subject to the
approval of the Parliament of each party to the Amending
Agreement.

The original Agreement was made on 24 June 1992
between the Commonwealth, New South Wales, Victoria and South
Australia. It was subsequently approved by the Parliament of
each party. The purpose of
the Agreement is to promote and co-ordinate effective planning and
management for the equitable, efficient and sustainable use of the
water, land and environmental resources of the Murray-Darling
Basin.

Broadly, the Amending Agreement:

·
provides for appropriate contracting governments to make annual
annuity contributions towards the future capital replacements and
major cyclic maintenance costs of River Murray Water;

·
enables annuity contributions to be accumulated and invested, and
allows the Murray-Darling Basin Commission (the Commission) to
borrow funds where accumulated annuity contributions are
insufficient to meet costs in any year. Borrowings would
require the approval of the Murray-Darling Basin Ministerial
Council;

·
enables the Murray-Darling Basin Ministerial Council (Ministerial
Council) to recover water business costs from State governments in
shares comparable to those which would apply if fee-for-service
pricing were introduced. These proportions must be reviewed
at least every five years;

·
enables the Ministerial Council to allocate responsibility for
River Murray Water structures from one constructing authority to
another, subject to the agreement of the parties concerned;

·
enables the Ministerial Council to alter from time to time
financial thresholds above which specific Council approval must be
sought by the Commission; and

·
clarifies that Queensland cannot be held liable for works and
measures in which it is not directly involved.

3.

The Amending Agreement also makes a number of
minor amendments to:

·
clarify the meaning of ‘works’ and
‘measures’;

·
clarify the annual estimates approval process;

·
simplify identification of the costs to which the Commonwealth
Government does and does not contribute;

·
give the Ministerial Council the flexibility to appoint an auditor
other than the Australian National Audit Office for the Commission;
and

·
update the list of works and measures in Schedule C to the
Agreement.

Financial Impact Statement

The Murray-Darling Basin Amendment Bill 2006 will
not have a negative financial impact for the Commonwealth as the
intention of the Bill is to eliminate surprises which currently
occur from year to year. The proposed new arrangements will
provide the Commonwealth with certainty and fore-knowledge as to
the yearly contributions it makes towards the management of
Murray-Darling assets. For example, future contributions
should be more consistent and more predictable. It is neither
anticipated nor intended that the Commonwealth Government’s
total contributions will change as a result of the
amendments.

4.

NOTES ON CLAUSES

Clause
1: Short title

1. This clause provides for the Act to be
cited as the Murray-Darling Basin Amendment Act
2006.

Clause 2:
Commencement

2. This clause provides that the
provisions of the Act, other than Schedule 1, will commence on
Royal Assent. Schedule 1 is to commence on a day to be fixed
by Proclamation. As complementary legislation in each
jurisdiction is required to carry the Amending Agreement into
effect, it is planned that the timing of the commencement of the
Act will coincide with the commencement of the corresponding New
South Wales, Victorian, Queensland, South Australian and Australian
Capital Territory Acts.
Consequently, no time limit has been placed on
Proclamation.

Clause 3:
Schedule(s)

3. This clause provides that the
Murray-Darling Basin Act 1993 and any other
Act that may be specified in a Schedule are to be amended or
repealed as set out in the Schedule(s) to the Act.

· Amend the definition of "Agreement" so that it
includes the Agreement as amended by the Amending Agreement
2006;

· insert a definition of "Amending Agreement
2006";

Clause 3: New
Section 5B

5. This clause inserts a new
section 5B into the Principal Act providing that the Amending
Agreement 2006 is approved by the Parliament.

Clause 4: At
the end of the Act

6. This clause inserts a new
Schedule 3 to the Principal Act. Schedule 3 contains the text
of the Murray-Darling Basin Agreement Amending Agreement 2006 as
signed by the Prime Minister of the Commonwealth of Australia, the
Premiers of Victoria, New South Wales, Queensland and South
Australia and the Chief Minister of the Australian Capital
Territory.

7. The
new Schedule 3 to the Principal Act introduces a number of key
initiatives.

5.

8.
Annual annuity contributions. These annuity contributions are
consistent with COAG water reform principles and will reduce
fluctuations which might otherwise occur in governments’
annual contributions to the Commission. They will also give a
better reflection of the long run costs of providing water business
services. The Commonwealth currently contributes 25 per cent
of the costs of investigations and construction of River Murray
Water’s water management structures in the River Murray
system. The Commonwealth does not contribute to the operation
and maintenance costs of these structures.

9.
Recovery of water business costs from State governments.
These amendments will enshrine COAG principles relating to the
costs of water services in the Agreement and eliminate
cross-subsidies between the States for water business costs.
This amendment will have no impact on the Commonwealth.

10. Allocation of
responsibility for River Murray Water structures. The
Agreement currently provides that the Murray-Darling Basin
Commission or the Ministerial Council must nominate which of the
contracting governments will be responsible for the construction,
operation and maintenance of works or the implementation of
measures under the Agreement. There is no authority for this
responsibility to be reallocated amongst government should it
become necessary. This amendment will have no impact on the
Commonwealth as it applies only to State authorities.

11. Financial
thresholds. These thresholds were set in 1992 with no
provision for adjusting them to account for changing values.
The approvals relate to the execution of work, the implementation
of measures ($2 million), the construction of work or the
acquisition of an interest in land ($1 million), and the acceptance
of tenders ($2 million).

12. Clarification of
Queensland’s responsibilities. Queensland became a
party to the Agreement on the basis that it would only contribute
towards works and measures in which it is directly involved.
This amendment will remove ambiguities in the Agreement that could
be interpreted as widening Queensland’s liabilities.
This amendment will have no impact on the Commonwealth.